Copyright Time Bomb Set to Disrupt Music, Publishing Industries

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Copyright Time Bomb Set to Disrupt Music, Publishing Industries

The late '70s, when punk exploded and disco imploded, were tumultuous years for the music industry. A time bomb embedded in legislation from that era, the U.S. Copyright Act of 1976, could bring another round of tumult to the business, due to provisions that allow authors or their heirs to terminate copyright grants — or at the very least renegotiate much sweeter deals by threatening to do so.

At a time when record labels and, to a lesser extent, music publishers, find themselves in the midst of an unprecedented contraction, the last thing they need is to start losing valuable copyrights to '50s, '60s, '70s and '80s music, much of which still sells as well or better than more recently released fare. Nonetheless, the wheels are already in motion.

"The termination that's going to be coming up is going to be a big problem for the record companies and publishers," said attorney Greg Eveline of Eveline Davis & Phillips Entertainment Law.

"It's written into the statute," said entertainment lawyer Robert Bernstein. "It's just a matter of time."

The Copyright Act includes two sets of rules for how this works. If an artist or author sold a copyright before 1978 (Section 304), they or their heirs can take it back 56 years later. If the artist or author sold the copyright during or after 1978 (Section 203), they can terminate that grant after 35 years. Assuming all the proper paperwork gets done in time, record labels could lose sound recording copyrights they bought in 1978 starting in 2013, 1979 in 2014, and so on. For 1953-and-earlier music, grants can already be terminated.

The Eagles plan to file grant termination notices by the end of the year, according to Law.com. "It's going to happen," said Eveline. "Just think of what the Eagles are doing when they get back their whole catalog. They don't need a record company now.... You'll be able to go to Eaglesband.com (updated) and get all their songs. They're going to do it; it's coming up."

Other artists are also filing notices (there's a five-year window), according to Bernstein. But in some cases, they're choosing to leave the copyright grant where it is — albeit with much more favorable terms.

"There are all different kinds of ways people approach it," said Bernstein. "If they have a publishing company that's making money for them, and collecting it and paying them well, they may just want a higher royalty. Or if they're unhappy, they get it back."

This isn't just about music. "It's every type of copyright," said Bernstein. "It doesn't distinguish between the types of copyright."

The only exceptions, he said, are derivative works such as movies based on novels that include certain music in their soundtracks, because Congress decided it was unfair to ask publishers to give those licenses back to artists and authors.

The record labels tried to defuse this bomb in 1999 by sneaking an amendment to the Copyright Act through the House of Representatives that would add sound recordings to the Act's list of copyrights that were considered "works for hire," which would make them exceptions to the grant termination clause. According to one source close to the situation, the labels told Congress that the Copyright Act already covered sound recordings as exceptions because albums of music are "compilations" — but that "just to be absolutely clear, [the labels] wanted to put it in so nobody can debate it."

After musicians, including Carly Simon, reacted negatively, the amendment was withdrawn amid public outcry leaving record labels with precisely two options for fending off notices of termination, neither of which looks promising. The first is to continue to claim that albums are compilations, which doesn't pass the common-sense test (compilations include songs from different artists), and probably won't pass legal muster either.

"Everybody kind of snickers at that [strategy]," said Eveline.

The second option is to re-record sound recordings in order to create new sound recording copyrights, which would reset the countdown clock at 35 years for copyright grant termination. Eveline characterized the labels' conversations with creators going something like, "Okay, you have the old mono masters if you want — but these digital remasters are ours."

Labels already file new copyrights for remasters. For example, Sony Music filed a new copyright for the remastered version of Ben Folds Five's Whatever and Ever Amen album, and when Omega Record Group remastered a 1991 Christmas recording, the basis of its new copyright claim was "New Matter: sound recording remixed and remastered to fully utilize the sonic potential of the compact disc medium."

If the labels' best strategy to avoid losing copyright grants or renegotiating them at an extreme disadvantage is the same one they're suing other companies for using, they're in for quite a bumpy — or, rather, an even bumpier — ride.